Thursday, January 12, 2017

Late last year I posted some questions for 2017: Ten Economic Questions for 2017. I'll try to add some thoughts, and maybe some predictions for each question.

2) Economic growth: Heading into 2017, most analysts are pretty sanguine and expecting some pickup in growth due to tax cuts and infrastructure spending. How much will the economy grow in 2017?

Here is a table of the annual change in real GDP since 2007. Economic activity has mostly been in the 2% range since 2010. Given current demographics, that is about what we'd expect: See: 2% is the new 4%.

Annual Real GDP Growth

Year

GDP

2005

3.3%

2006

2.7%

2007

1.8%

2008

-0.3%

2009

-2.8%

2010

2.5%

2011

1.6%

2012

2.2%

2013

1.7%

2014

2.4%

2015

2.6%

20161

1.7%

1 2016 estimate.

It is possible that there will be a pickup in growth in 2017 due to a combination of factors.

The new administration's policy proposals are unclear, but it appears there will be tax cuts, possibly more government spending on infrastructure, and possibly less regulation (easier borrowing).

There will probably be some economic boost from oil sector investment in 2017 since oil prices have increased (this was a drag last year).